BSNC subsidiary pays $2 million to settle whistleblower lawsuit

A subsidiary of Bering Straits Native Corporation last week paid the Southern District of Texas $ 2 million in damages after settling a whistleblower lawsuit alleging violations of the False Claims Act.

According to the U.S. Attorney’s office of the Southern District of Texas, the lawsuit was filed under seal in Houston, Texas, in February 2012, alleging that BSNC subsidiary Bering Straits Technical Services LLC made false claims that were submitted to the Department of Defense and the Defense Logistics Agency for maintenance facility services provided by BSTS at the Red River Army Depot, near Texarkana, Texas.

“Specifically, the whistleblower alleged that beginning in September 2010, BSTS and BSNC submitted false preventative maintenance reports for maintenance that was not performed and false repair work orders, thereby overcharging the government,” a DoJ press release reads. “The complaint also claimed that BSTS and BSNC employees were directed to repair equipment that no longer existed or was no longer in service and compelled to claim maintenance hours and supply costs for work that was not performed.” The DoJ also alleges that employees were coerced to make up hours with no relation to time actually spent on the maintenance. “Invoices were based on the fraudulent documents and presented to the U.S. for payment,” the DoJ document reads.

“Yesterday’s settlement should serve as a reminder to government contractors of their accountability to the public,” U.S. Attorney Kenneth Magidson said after the settlement was reached. The case was settled on April 26, with no admission of liability.

The case was investigated by the Defense Criminal Investigative Service, the Defense Contract Audit Agency, the U.S. Army Criminal Investigation Command and the Dept. of Justice.

BSNC Vice President Media and External Affairs Matt Ganley responded to a Nome Nugget request for comment but said via email that “due to the nature of the litigation and settlement we are unable to discuss the case.” Ganley issued a statement on behalf of BSTS, saying that the settlement has been completed and that the lawsuit was brought on by a former BSTS employee.

The statement says that the companies resolved the case to avoid costs of further litigation. “Neither company admitted any fault or liability whatsoever and continue to deny the allegations,” the statement said. “BSTS will pay the government two million dollars to resolve disputes over whether certain invoices submitted to the government accurately reflected work performed by BSTS.” 

BSTS is listed on BSNC’s website as a subsidiary offering “short- and long-term general management solutions related to administrative management services, financial planning, records management, office planning and organizational planning.” However, the DoJ states that BSTS performed facility maintenance. The statement also said that the two contracts BSTS had with the U.S. Army Corps of Engineers to provide services at the Red River Army Depot were terminated in February 2013 and August 2014, and that BSTS ceased providing services in August 2014.

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